The Path to Real Prosperityhttp://www.yesmagazine.org/blogs/david-korten/the-path-to-real-prosperity
Step by step we can reclaim for Main Street the economic and political power that Wall Street now holds and create a world that truly works for all.

Like most white middle class Americans of my generation, I grew up believing that our strong market economy and democratic political institutions make us the world's greatest and most prosperous nation. The America of my youth was the product of a strong social contract that said we are all in this together—at least the white folks—and we all do best when we all do well. That contract made America the envy of the world. With the civil rights movement, many of us hoped we could expand the contract to truly include everyone.

Then Wall Street got greedy, abandoned the contract, and created a winner-take-all economy controlled by an oligarchy dedicated to growing its personal financial assets. Contrary to what Wall Street propagandists would have us believe, Wall Street is a job killer, not a job creator. It prospers by depressing wages, eliminating and outsourcing American jobs, and extracting usurious interest rates from Americans forced to borrow to put food on the table or to maintain a middle class lifestyle. The result is an America in decline and out of work.

Wall Street flies the American flag when it is convenient. It relates to America, however, as an alien occupier, much like the British prior to the American Revolution. Tax breaks and deregulation for Wall Street will only strengthen the role of the occupier and destroy more jobs than they create. An effective jobs program will increase taxes on Wall Street corporations and billionaires and regulatory restraints on their destructive practices.

As I witness the devastation wrought by the Old Economy, my greatest
source of sadness comes from an awareness of the profound gap between
our human reality and our human possibility.

Main Street is the job creator. We rebuild America’s productive capacity through programs and institutions that support and invest in Main Street businesses, farms, and infrastructure owned by people who have a stake in being responsible citizens in their communities. These programs and institutions are properly funded, at least in part, by taxing the financial wealth expropriated by Wall Street corporations and billionaires through deception and unproductive financial manipulation.

To build a prosperous 21st century America we must declare our national independence from Wall Street and build a New Economy adapted to the realities of a finite planet and an interconnected 21st century world.

The underlying institutional structure of this New Economy will look a good deal like the Main Street economies of human-scale, locally rooted businesses that produced the American middle class, made America the world leader in industry and technology, and fulfilled the American Dream for millions of Americans. This economy was the product of rules put in place in response to the Great Depression of the 1930s to limit Wall Street power and hold it democratically accountable to Main Street needs and interests.

Shifting economic and political power from a predatory Wall Street economy to a generative Main Street economy is the common theme of most every initiative documented or recommended in my book, Agenda for a New Economy and this blog series.

Unlike the American economy either before or after the Wall Street takeover, America’s new 21st century economy will:

We can turn as a species from an economic system devoted to perfecting our capacity for violent exclusionary competition to one devoted to perfecting our capacity for caring, inclusive cooperation. We can turn from economic institutions that draw down Earth’s nonrenewable reserves of fossil energy to oppose, dominate, and mine Earth’s biosphere to institutions that work in integral partnership with the extraordinary generative capacity of Earth’s self-organizing living systems.

Agenda for a New EconomyHow can we build an economy that works for all of us? David Korten lays
out his vision in this special serialization of his latest book.

As I witness the devastation wrought by the Old Economy, my greatest source of sadness comes from an awareness of the profound gap between our human reality and our human possibility. My greatest source of joy and hope is my awareness of the vitality of the human spirit as demonstrated by the millions of people who are working to realize their shared vision of a just and sustainable world that works for all. My greatest source of motivation is the knowledge that it is within our collective means to unleash the positive creative potential of the human consciousness and make that vision a reality.

We are privileged to live at the most exciting moment of creative opportunity in the whole of the human experience. Now is the hour. We have the power to turn this world around for the sake of ourselves and our children for generations to come. We are the ones we have been waiting for.

Interested?

How is it that our nation is awash in money, but too broke to provide
jobs and services? David Korten introduces a landmark new report, “How
to Liberate America from Wall Street Rule.”

David Korten: The biggest shifts of our time have been sparked by
ordinary people rejecting the cultural stories that dominated them.

David Korten: If we'd stop tearing each other apart, we might see an
opportunity to win back our democracy from the rich and powerful.

]]>No publisherAgenda for a New Economy2011/09/07 16:55:00 US/PacificArticleA Presidential Declaration of Independence from Wall Street—Part 2http://www.yesmagazine.org/blogs/david-korten/a-presidential-declaration-of-independence-from-wall-street-part-2-1
What might a truly new economic vision for America look like? This is my answer framed as the presidential address we must prepare the way for a future president to deliver.

Recognizing that the world can no longer afford war, the foreign
policy of this administration will be crafted to build cooperation among
people and nations in order to eliminate terrorism and its underlying
causes, resolve conflicts through peaceful diplomacy, roll back military
spending and demilitarize the economies of all nations, restore
environmental health, and increase economic stability.

We will work to replace a global system of economic competition with a
global system of economic cooperation based on the sharing of
beneficial technology and the right of the people of each nation to own
and control their own economic resources to meet their needs for food,
energy, shelter, education, health care, and other basics. We will work
to protect the rights and health of working people and the environment
everywhere.

To that end, I will do all in my power to correct the legal travesty
perpetrated against democracy by the Supreme Court decision in Citizens
United. I will put my administration behind a Constitutional amendment
to make clear that Constitutional protections apply only to real people,
not to corporations. And I will appoint only judges who understand the
difference between people and corporations.

Any corporation that is too
big to fail is too big to exist.

The only reason for a government to grant a corporate charter is to
serve a well-defined public purpose under strict rules of public
accountability. Therefore, I am appointing a commission to recommend
legislation to require that each corporation’s public purpose is
specified in its charter and is subject to periodic public review.

Through a public legal process, we will work with state governments
to withdraw the charter from, and force the dissolution of, any
corporation that consistently fails to obey the law and fulfill a
legitimate public purpose.

There will be no no-strings government bailouts of failed banks or
other corporations during my administration. Any corporation that is too
big to fail is too big to exist. We will break up excessive
concentrations of economic power and restore market discipline through
vigorous antitrust enforcement and create economic incentives for
oversized corporations to break themselves up into their component
units.

With specific regard to Wall Street, there is no place in a
life-serving twenty-first-century economy for financial speculation,
predatory lending, or institutions that exist primarily to engage in
these illegitimate practices.

We will act to render Wall Street’s casino-like operations
unprofitable. We will impose a speculation tax, require responsible
capital ratios, tax capital gains at the same rate as ordinary income,
and impose a significant penalty surcharge on short-term capital gains
from speculative trading. We will make it illegal for people and
corporations to sell or insure assets that they do not own or in which
they do not have a direct material interest. We will prohibit financial
institutions from trading for their own accounts in securities they sell
to the public.

To meet the financial needs of the new twenty-first-century Main
Street economy, we will reverse the process of mergers and acquisitions
that created the current concentration of banking power in Wall Street
institutions delinked from national and community interests and
accountability. We will restore the previous system of federally
regulated locally owned and managed community banks that fulfill the
classic textbook banking function of financial intermediation between
local people looking to secure a modest interest return on their savings
and local people who need a loan to buy a home or finance a business.
We will favor banks organized as nonprofit cooperatives, or owned by a
nonprofit or a state or local government.

We will recommit ourselves to the founding ideals of this great
nation, focus on our possibilities, and liberate ourselves from failed
economic ideologies and institutions.

I have instructed the Secretary of the Treasury to take immediate
action to assume control of the Federal Reserve and restructure it to
function as an independent, but publicly transparent, federal agency
accountable to the president and the Congress. The new federalized
Federal Reserve will have a mandate to stabilize the money supply,
contain housing and stock market bubbles, discourage speculation, and
assure the availability of credit on fair and affordable terms to
eligible Main Street borrowers.

I am asking Congress to create a Federal Recovery and Reconstruction
Bank. Henceforth, all new money created by the Federal Reserve will be
directed to this newly created bank in the form of interest free
nonrecourse bonds to finance green infrastructure projects as designated
by Congress.

We will recommit ourselves to the founding ideals of this great
nation, focus on our possibilities, and liberate ourselves from failed
economic ideologies and institutions. Together we can create a stronger,
better nation and world to secure a fulfilling life for every person
and honor the premise of our Declaration of Independence that every
individual is endowed with an unalienable right to life, liberty, and
the pursuit of happiness.

(I hereby extend to President Obama or any future American president
permission to deliver all or any portion of this address as his own
without need for attribution.)

David Korten: How the buccaneers and privateers of days past came to be the Wall Street profiteers of the present.

As we look for solutions to our current economic crisis, the relevant
distinction is no longer between capitalism and communism, but rather
between Wall Street and Main Street.

How is it that our nation is awash in money, but too broke to provide
jobs and services? David Korten introduces a landmark new report, “How
to Liberate America from Wall Street Rule.”

]]>No publisherAgenda for a New Economy2011/08/29 20:25:00 US/PacificArticleA Presidential Declaration of Independence from Wall Street -Part 1http://www.yesmagazine.org/blogs/david-korten/a-presidential-declaration-of-independence-from-wall-street
What might a truly new economic vision for America look like? This is my answer framed as the presidential address we must prepare the way for a future president to deliver.

We in America rely on foreign consumer credit to live ever further beyond our own means, while allowing our physical, social, and productive infrastructure to deteriorate from neglect. It is the classic path of a dying Empire in decline and denial.

America needs a new national vision, a story of possibility to guide our way in a 21st century world much changed from the world in which we achieved our greatness. Perhaps one day an American president will spell it out in an inaugural or state of the union address along the following lines.

In the meantime, a hypothetical presidential address provides a useful device to frame a New Economy vision for America.

Fellow Citizens:My administration came to office with a mandate for bold action to deal with the evident failure of our most powerful economic institutions. The excesses of Wall Street have crippled our economy; burdened our federal, state, and local governments with debilitating debts; divided us into the profligate and the desperate; corrupted our political institutions; and threatened the destruction of the natural environment on which our very lives depend.

Wall Street’s success comes at an enormous cost to the nation, and to the folks on Main Street who do honest, productive work and make honest, productive investments.

This devastation is the product of a failed economic ideology that says if government favors the financial interests of the rich to the disregard of all else, everyone will benefit and the nation will prosper. A thirty-year experiment with this perversion of both logic and basic moral values demonstrates that it works only for Wall Street bankers who put profits ahead of people and produce nothing of real value.

Wall Street’s success comes at an enormous cost to the nation, and to the folks on Main Street who do honest, productive work and make honest, productive investments. We now live with the devastating consequences of Wall Street’s ill-conceived social engineering experiment in market deregulation and tax avoidance for the rich: a disappearing American middle class and a crumbling physical infrastructure; failing schools; millions without health care; dependence on imported goods, food, and energy, and even essential military hardware.

This is not a broken system in need of a fix. It is a failed system that must be replaced with a new system in tune with the lessons of experience and the realities of the 21st century. We have been measuring economic performance against GDP, or gross domestic product, which essentially measures the rate at which we are converting useful resources into toxic garbage to make money for Wall Street. Let us henceforth measure economic performance by the indicators of what we really want: the health and well-being of our children, families, communities, and the natural environment.

Together we can actualize the founding ideals of our nation as we restore the health of our economy.

Like a healthy ecosystem, a healthy twenty-first-century economy must have strong local roots and maximize the beneficial capture, storage, sharing, and use of local energy, water, nutrients, and other mineral resources. That is what we must seek to achieve, community by community, all across this great nation, by unleashing the creative energies of our people and our local governments, businesses, and civic organizations.

The policies of this administration henceforth will favor the people and businesses of Main Street—people who are working to rebuild our local communities, restore the middle class, and bring our natural environment back to health. Together we can actualize the founding ideals of our nation as we restore the health of our economy.

We will strive for local and national food independence by rebuilding our local food systems based on family farms and environmentally friendly farming methods that rebuild the soil, maximize yields per acre, eliminate the need for toxic chemicals, and create opportunities for the many young people who are returning to the land.

We will strive for local and national energy independence by supporting local entrepreneurs who are creating and growing businesses to retrofit our buildings and develop and apply renewable-energy technologies.

We will take steps to assure that our future trade relations are balanced and fair, return manufacturing jobs to America, rebuild our manufacturing capacity on an environmentally sound closed-loop manufacturing model, and learn to live within our own means.

We will rebuild our national infrastructure around a model of walkable, bicycle-friendly communities with efficient public transportation to conserve energy, nurture the relationships of community, and recover our agricultural and forest lands.

A strong middle-class society is an American ideal. We will act to restore that ideal through appropriate steps to assure access by every person to high-quality health care, education, and other essential services. We will restore progressive taxation, as well as progressive wage and benefit rules, to protect working people.

We will create a true ownership society through economic policies that favor responsible ownership of locally rooted enterprises by people who have a stake in the health of their own communities and economies.

My administration will reorder priorities at the national level to support your efforts at the local level to advance these outcomes.

David Korten: We’re in the midst of a contest of competing stories—one fabricated to serve the interests of Empire; the other an authentic story born of the experience and aspirations of ordinary people.

David Korten: What America's current movement against corporate power can learn from that time we overthrew a king.

It’s time we the people declare our independence from the money-favoring Wall Street economy.

]]>No publisherAgenda for a New Economy2011/08/22 16:35:00 US/PacificArticleHow You Can Get Started Building a New Economyhttp://www.yesmagazine.org/blogs/david-korten/how-you-can-get-started-building-a-new-economy
No one of us can do it alone. If, however, we each contribute according to our distinctive gifts and circumstances, together we can turn the human course.

For those of us already engaged in bringing the New Economy into being, daily news headlines provide ample reason to feel discouraged. Even major successes seem insignificant relative to the scale of the disruption wrought by the death throes of the Wall Street system.

I recall the counsel of a wise elder who told me in my youth, “It is
possible to tack a sail boat into the wind, but only once it is in
motion.”

It is essential to step back from time to time. Take a breath. Look out beyond the immediate horizon to gain perspective on the less visible but inspiring phenomenon of millions of people engaged in building the foundations of local living economies all around the world. Read their stories in YES! Magazine and reflect in awe and wonder at this epic phenomenon of human commitment to transformation.

If you are new to the movement and looking for ways to engage, you might begin by declaring your personal independence from Wall Street. Shop at local independent stores where possible, and purchase locally made goods when available. Make similar choices as to where you work and invest. Join the voluntary simplicity movement by cutting back on unnecessary consumption.

Pay with cash at local merchants to save them the credit card fee. Do your banking with an independent local community bank or credit union that will invest your money back in your community. Coop America provides a useful free Investing in Communities guide.If you are drawn to engage with others, keep in mind that there is no magic bullet solution and no one individual is going to resolve the dysfunctions of Wall Street’s misadventures by themself. The key is to find opportunities to contribute that fit your distinctive skills, passion, and connections.

I recall the counsel of a wise elder who told me in my youth, “It is possible to tack a sail boat into the wind, but only once it is in motion.” Get started with the opportunities you find near at hand. Be open to new possibilities and let your engagement evolve naturally over time. In the words of Myles Horton and Paulo Freire, “We Make the Road by Walking.”

Be prepared to stay the course. I decided to devote my life to changing the world in the last term of my senior year of college in 1959. I was just 22 and armed with little more than youthful enthusiasm. I began to make a meaningful contribution in 1992 at age 51. I began to really find my stride about age 70.

1. Change the Story.

Keep in mind that every transformational social change begins with a conversation around a vision of possibility. Take advantage of every opportunity to engage in conversation about the realities of Wall Street, the difference between phantom wealth and real wealth, and the nature and possibilities of the New Economy. Consider inviting a group of friends or neighbors to discuss Agenda for a New Economy. The Living Economies Forum website provides a group discussion guide and links to other New Economy 2.0 discussion resources, as does the New Economy Working Group site. Join or form a Resilience Circlefor mutual education and support in dealing with the economic crisis

3. Change the Rules.

Get involved in political action campaigns that support the transition to living indicators, community-based financial institutions, an equitable distribution of wealth, living enterprises with living owners, real markets and real democracy, self-reliant bio-regional economies, and global rules that favor people power over corporate power. These are the “Seven Interventions” outlined in an earlier blog. Join the American Dream Movement, which is mobilizing support for the Contract for the American Dream—a visionary New Economy policy agenda.

Here is a useful checklist for assessing the potential contribution of initiatives that reach out to others.

Does it:

Communicate a vision of possibility?

Develop new connections between people who share common interests?

Create and expand liberated social spaces in which people experience the freedom and support to experiment with thinking and acting in creative new ways?

Provide a public demonstration of the possibilities of the New Economy?

Build a support base for constructive policy action?

If your initiative contributes to any one of these, then it is probably making a positive difference in the world.

Don’t be discouraged if the world looks much the same tomorrow, despite your heroic effort today. It took 5,000 years to create the culture and institutions of Empire that we must now put behind us. It will take a few years and the contributions of millions of people to bring forth the new cultures and institutions that will set us free.

Today’s economy relies on a globalized supply chain—where a single broken link can lead to widespread financial catastrophe. It doesn’t have to be that way.

Rather than turning again to increased global competition to mend our failing economy, we must instead steer our focus toward cooperation and equality.

David Korten: What economic transformation has to do with building stronger, happier communities.

]]>No publisherAgenda for a New Economy2011/08/15 09:40:00 US/PacificArticleAre You a Culture Worker?http://www.yesmagazine.org/blogs/david-korten/are-you-a-culture-worker
From religion to the arts, we have more influence on culture than we think. We can use that power to expand or to limit our possibilities as a species.

This is part thirty-two of a series of blogs based on excerpts adapted from the 2nd edition of Agenda for a New Economy: From Phantom Wealth to Real Wealth. I wrote Agenda to spur a national conversation on economic policy issues and options that are otherwise largely ignored. This blog series is intended to contribute to that conversation. —DK

Media, education, religion, and the arts all have defining roles in crafting and propagating the cultural stories by which we humans understand our natures and the possibilities open to us. If you are a member of any one of these professions, think of yourself as a modern culture worker. For better or worse, you are engaged in crafting and propagating the cultural stories that serve either to legitimate the devastation the old economy causes or shine a light on the possibilities of the new economy.

Wall Street has aggressively recruited members of each of these professions to its service. Its recruits, often unwittingly, craft and propagate the stories that hold modern societies in the thrall of corporate empire. The monetary rewards can be quite attractive, but they come at the price of the personal integrity we expect of the practitioners of these influential crafts.

Here are some of the problems—and possibilities—when it comes to telling a new story.

Media

The consolidation of advertising-dependent mass print and broadcast media under the control of for-profit corporate conglomerates is ideally suited to serving Wall Street interests. The corporate media have reduced news reporting to inane, politically slanted commentary limited to the market fundamentalist economic frame.

Fortunately, the communications revolution that is linking the world in a seamless web of communication and information opens unprecedented opportunities for service-oriented nonprofit media organizations like YES! Magazine (of which I am co-founder). Even relatively small organizations now have the potential to reach and influence mass audiences. Community newspapers and radio stations, independent media centers, blogs, and podcasts all offer alternatives to the corporate voice.

Education

We need an educational system that produces the creative, critical minds needed to lead the process of social and economic transformation.

As Wall Street has helped rewrite the tax laws to absolve corporations of their civic responsibility to pay their fair share of taxes, cash-strapped public schools and universities have turned to corporations for sponsorships, curriculum materials, and research grants. This has given corporations undue influence over the underlying academic culture to the detriment of the critical intellectual inquiry and teaching we so badly need. For-profit corporations should be required to pay their fair share of taxes in support of the educational institutions on which they depend for their workers and customers. Their ideology should be kept out of the classroom.

We need an educational system that produces the creative, critical minds needed to lead the process of social and economic transformation. This requires taking down walls that separate students from communities and nature. It requires interdisciplinary approaches to learning that engage teachers and their students in active exploration. It requires shedding courses (for example, market fundamentalist economics) that propagate flawed ideology as science, in favor of courses that advance the authentic pursuit of truth and provide the intellectual tools needed by responsible citizen leaders.

Religion

The New Economy must be built on the foundation of a moral awakening. Fortunately, there are signs of faith institutions rising to the occasion to reclaim their prophetic moral and spiritual mission. Sermons and adult education programs can raise the moral issues relating to human responsibility for one another and the living Earth and explore the implications for societal transformation. Faith institutions can reach out to bridge destructive religious divides and grow the relations of mutual caring foundational to an inclusive Earth Community.

As with educational transformation, the transformation of our faith institutions begins one church, synagogue, temple, and mosque at a time. It is a process with the potential to build quickly toward critical mass as more faith institutions rediscover their prophetic mission to teach love for all beings as the path to salvation in the here and now.

The Arts

The true artist is a truth teller who has the ability see reality untainted by cultural filters.

Among the four professions named, artists are the most likely to self-identify as culture workers. Artists can use their craft to befuddle our minds, justify evil, and entice us into self-destructive behavior, as demonstrated by the many talented artists in the employ of corporations and politicians seeking power through the propagation of fear, greed, and violence. The pay is good, the goals are clear, and there is a lot of money to buy media.

The true artist, however, is a truth teller who has the ability see reality untainted by cultural filters. Artists can shake us out of the cultural trance that leads us to consume harmful products, play the mark in Wall Street con games, and support corrupt politicians. Talented artists can help us see beauty, meaning, and possibility where it may otherwise escape our attention. They can take us on an imaginary journey to a future no one has yet visited to experience possibilities we may not have imagined. Our movement needs the contribution of millions of artists devoted to liberating human consciousness.

My friend and colleague Bill Cleveland collects and shares stories of the many independent artists who are engaging whole communities in processes of discovering their inner beauty and creative potential through artistic experience. These processes strengthen the community’s sense of itself and enhance the readiness of its members to engage together in community building and the creation of vibrant local living economies. It is a work to which all four of the culture worker professions have much to contribute.

]]>No publisherAgenda for a New Economy2011/08/08 13:25:00 US/PacificArticleMaking Change Happen: A Three-Fold Strategyhttp://www.yesmagazine.org/blogs/david-korten/a-three-fold-change-strategy
To turn the human course, change the framing story, create a new reality, and change the rules.

Social systems self-organize around ideas and relationships. They are living, complex, dynamic, and constantly evolving as they and their members learn from shared experience. The organism, not the machine, provides the appropriate metaphor. The relevant knowledge resides not with outside experts but with the people who populate the system. The challenge for those who strive to be agents of transformational change is to help members of their group, community, or society recognize, organize, and use that knowledge in ever more effective ways.

Through the dynamics of societal scale social learning processes, people innovate, create, and learn to relate in new ways that enhance their shared well-being. Individual learning translates into community learning that translates into species learning.

The overall process has three primary elements that frame a powerful societal-scale change strategy.

Change the defining stories of the mainstream culture. My previous New Economy 2.0 blog made the case that “Every Great Social Movement” begins with an idea carried forward through conversations that challenge and ultimately displace a prevailing cultural story. The civil rights movement is changing the cultural story on race. The women’s movement is changing the story on gender. The environmental movement is changing the story on the human relationship to nature. Through public presentations, books, magazines, talk shows, and the Internet’s many communications tools, millions of people are now spreading stories of the possibilities of a New Economy.

Create a new economic reality from the bottom up. Many of those who have been inspired by some aspect of the New Economy story are already engaged in initiatives that are building the foundation of strong local living economies. They are establishing and supporting locally owned human-scale businesses and family farms that create regional self-reliance in food, energy, and other basic essentials. They are moving their money to local banks and credit unions, retrofitting buildings for energy efficiency, and changing land-use policies to favor compact communities, reduce auto dependence, and reclaim agricultural and forest lands. By creating a new reality on the ground their actions open opportunities for new personal choices, demonstrate the possibilities of the new story, and build a base for effective political action.

Change the rules to support the values and institutions of the emergent new reality. The rules put in place by Wall Street lobbyists put the economic rights of global financiers and corporations ahead of the economic rights of ordinary people, place-based communities, and even nations. As we change the story and build appropriate institutions from the bottom up, we gain the political traction needed to change the rules to support democratic self-determination at the lowest feasible level of systems organization.

Successful social movements are emergent, evolving, radically self-organizing, and involve the dedicated efforts of many people, each finding the role that best uses his or her gifts and passions.

My life path has led to a somewhat unusual interconnected engagement with all three strategic elements. I participated in founding YES! Magazine to communicate the stories of human the future it is ours to create and serve as its board chair. I am a founding board member of the Business Alliance for Local Living Economies, which supports communities across the United States and Canada in growing the New Economy from the bottom up. And I co-chair the New Economy Working Group, which is framing and advancing a New Economy policy agenda.

Social systems self-organize around ideas and relationships. They are
living, complex, dynamic, and constantly evolving as they and their
members learn from shared experience.

Social movements grow and evolve, not through top-down direction, but around framing ideas and mutually supportive relationships. New ideas gain traction or not depending on their inherent appeal and utility. As individual groups find one another, new alliances may emerge or not, depending on what works for those involved in the moment. Some alliances are fleeting; others endure.

As social movements develop, multiple sources of leadership are essential. There are many individuals and organizations whose work incrementally influences the whole. Any individual or group, however that presumes to be the leader of the whole or aspires to organize a central coordinating body to impose order on the chaos does not understand the process. Self-organizing chaos is integral to the movement building process and essential to its success.

]]>No publisherAgenda for a New Economy2011/08/01 15:25:00 US/PacificArticleEvery Great Social Movement http://www.yesmagazine.org/blogs/david-korten/every-great-social-movement
When ordinary people reject the cultural stories that limit their possibilities and bind them to servitude, the course of history turns.

Every great social movement begins with a set of ideas validated, internalized, and then shared and amplified through media, grassroots organizations, and thousands, even millions, of conversations. A truth strikes a resonant chord, we hear it acknowledged by others, and we begin to discuss it with friends and associates.The new story spreads out in multiple ever-widening circles that begin to connect and intermingle.

A story of unrealized possibility gradually replaces the falsified story that affirmed the status quo. The prevailing culture begins to shift, and the collective behavior of the society shifts with it.

For the civil rights and women’s movements, the old story said:

Women and people of color have no soul. Less than human, they have no natural rights. They can find fulfillment only through faithful service to their white male masters.

A profound cultural shift occurred between 1950 and 1980 as the consequence of a growing rejection of these stories in favor of a new story that recognized and affirmed the full humanity and rights of all people.

It began with the civil rights movement, inspired in part by the words and writing of W. E. B. DuBois, founder of the National Association for the Advancement of Colored People (NAACP). His ideas were carried forward by others such as the Reverend Martin Luther King Jr. Communicated through books, periodicals, and speeches, these ideas inspired and shaped countless conversations, particularly in black churches, about race and the possibilities of integration based on a full recognition of the inherent humanity of people all races.

A story of unrealized possibility gradually replaces the falsified story
that affirmed the status quo. The prevailing culture begins to shift,
and the collective behavior of the society shifts with it.

Thinkers, writers, and activists who embraced the idea of integration engaged in verbal combat with those who defended the status quo as legitimated by the old story. As the story of possibility gained currency, proponents engaged in nonviolent civil disobedience in the form of sit-ins in segregated facilities, which began to create a new reality and set the stage for political demands to replace laws that institutionalized the old story with laws that institutionalized the new.

In 1963, as the civil rights movement was gaining traction, Betty Friedan published The Feminist Mystique, calling attention to a vague dissatisfaction plaguing housewives. It touched a deep chord and became the focus of thousands of living room conversations in which women who had been raised on the story that the key to a woman’s happiness was to find the right man, marry him, and devote her life to his service gathered to share their own stories. Conditioned to believe that failure to find happiness in service to their husbands revealed a character flaw they must strive to correct, those for whom this wasn’t working found they were not alone. The flaw lay not with them, but with the false story.

Those whom these discussions initially liberated lent their voices to a growing chorus that spread a story of women’s rights and abilities. As millions of women joined in the conversation, a new gender story came to the fore and unleashed the feminine as a powerful force for global transformation.

The environmental movement emerged as a challenge to two old stories, one biblical and one secular:

God gave nature to man to do with as he pleases.

Nature has no value beyond its market price and is properly used for whatever purpose generates the greater financial return.

Many trace the origin of the modern environmental movement to Rachel Carson’s Silent Spring, published in 1962. It stimulated countless conversations about the human relationship to nature. The resulting challenge to the old stories spread through media and academic programs. A new political consensus on the human imperative and responsibility to protect and conserve nature began to emerge.

These transforming experiences have combined with the growth in global intercultural exchange that came with the expansion of international air travel to awaken a consciousness of culture as a perceptual lens and a human construct with powerful consequences. With that awakening came recognition of the need to accept responsibility for our shared stories and their consequences.

Together the great social movements of the 20th century and the expansion of international communication has unleashed global scale liberation of the human mind that transcends the barriers of race, class, and religion and has enabled hundreds of millions of people see themselves and the larger world in a new light.

The awakened consciousness is relatively immune to manipulation by corporate media, advertising, and political demagogues. For those who share this experience, the stories that affirm and encourage racism, sexism, homophobia, and consumerism are more easily seen for what they are—a justification for imperial domination, exploitation, and violence against life.

The global awakening creates the opportunity for the first time in 5,000 years to consign the dominator structures of Empire to the dustbin of history, bring forth a New Economy, and complete the human transition to full-fledged democracy and Earth Community.

]]>No publisherAgenda for a New Economy2011/07/25 23:10:00 US/PacificArticleThe Story of a New Economyhttp://www.yesmagazine.org/blogs/david-korten/the-story-of-a-new-economy
As the story fabricated to serve Empire unravels, an authentic story born of the experience and aspirations of ordinary people is emerging to displace it.

Some years ago the Filipino activist-philosopher Nicanor Perlas shared an insight with me that has since been a foundation of my work. Each of the three institutional sectors—business, government, and civil society—has its distinctive power competence. Business commands the power of money. Government commands the coercive power of the police and military. Civil society commands the power of authentic moral values communicated through authentic cultural stories. Moral authority ultimately trumps the power of money and guns. Therefore, civil society holds the ultimate power advantage.

This simple frame helped me see the extent to which the global citizen resistance against the corporate misuse of multilateral trade agreements was a contest between competing stories—one fabricated to serve the interests of Empire; the other an authentic story born of the experience and aspirations of ordinary people. According to the story fabricated and promoted by Wall Street’s PR machine:

The use of multilateral trade agreements to eliminate national borders as barriers to the free flow of trade and investment is bringing universal peace, prosperity, and democracy to all the world’s peoples and nations.

Wow, that sounds wonderful. But even in the early 1990’s it was becoming evident that the reality was quite different.

A group of some 50 citizen activist-leaders from around the world began meeting in 1994 to share their actual experience with these agreements. They found a consistent pattern of results wholly contrary to the corporate story, broke the silence, and spread the real story:

Multilateral trade agreements are freeing global corporations from restrictions on their ability to exploit workers, ignore community interests, circumvent democracy, pollute the environment, and expropriate the resources of poor countries, with devastating consequences for people, community, democracy, and nature.

Just as fabricated stories are an instrument of social control, authentic stories are an instrument of liberation. Although corporations controlled the money and the media, the civil society story trumped the corporate story, because it was true to what people were actually experiencing. The awakening of public consciousness changed the political context of corporate-sponsored multilateral trade negotiations and brought them to a near standstill.

A similar process is now playing out. The fabricated story that there is no alternative to the existing Wall Street system is being challenged by the New Economy story that it is possible to create a world of strong communities and living economies. People across the United States and the world are organizing to make the new story a reality in the places where they live.

Once that connection is made between a possible human future and the
soul’s deepest yearning, the lies of Wall Street advertisers and
propagandists are exposed and trance is broken.

The New Economy story that we humans are capable of creating a vibrant, peaceful, cooperative world bursting with life resonates deep within the soul of all but the deeply psychologically damaged. Once that connection is made between a possible human future and the soul’s deepest yearning, the lies of Wall Street advertisers and propagandists are exposed and trance is broken. We are liberated to take responsibility for our future and get on with living the world of our shared human dream into being.

New Economy messages are spreading through countless conversations to challenge the false claims of the fabricated stories of the old economy culture that:

Life, not money, is the true measure of value; money’s only legitimate use is in life’s service. An obsession with making money is a sign of psychological and social dysfunction.

Markets are essential to the function of a healthy democratic society. Their proper function, however, depends on proper rules implemented by democratic governments under the watchful eye of a strong and dynamic civil society.

Story power is the ultimate power. Authentic stories liberate the human consciousness, build immunity to cultural manipulation, and give us the courage and insight to create a world of peace and prosperity for all.

Professional propagandists and advertisers use mass media and other instruments of cultural reproduction to control our minds and behavior, displacing authentic cultural stories with fabricated stories that support the interests of their clients. Most commonly, the goal is to get us to vote for a particular political candidate or buy a particular product. By recognizing the nature and function of culture in shaping our understanding of ourselves and our world, we can develop substantial immunity to these mind control techniques.

The financial crash of 2008 has so exposed the underlying fallacies of
the fabricated story that millions of people have been shocked out of
the trance.

Culture is the system of beliefs, values, perceptions, and social relations that encodes the shared learning of a particular human group essential to individual survival and orderly social function. It serves as the interpretive lens through which the human brain processes the massive flow of data from our senses to distinguish the significant from the inconsequential, assign meaning, and shape our behavior: “This plant will kill you. That one is food.”

The cultural lens reflects both the individual learning of personal experience and the shared learning of the tribe, as communicated through its framing cultural stories. These stories, which the tribe’s storytellers traditionally passed from generation to generation, shape our collective identity and relationships. “This is who we are, what we value, and how we behave.”

The processes by which culture shapes our perceptions and behavior occur mostly at an unconscious level. It rarely occurs to us to ask whether the reality we perceive through the lens of the culture within which we grew up is the “true” reality. We just take for granted that it is.

For five thousand years, successful imperial rulers have maintained their power in part by controlling the story tellers to communicate fabricated cultural stories that evoke fear, alienation, learned helplessness, and a sense dependence on a strong ruler for direction and protection.

This induces a cultural trance that suppresses our inherent human capacity for responsible self-direction, sharing, and cooperation. The falsified stories create an emotional bond between the ruled and their rulers while alienating the ruled from one another and the living Earth, eroding relations of mutual self-help, and reducing the ruled to a state of resigned dependence.

Corporate advertisers and PR propagandists have mastered and professionalized the arts of cultural manipulation. Their stories lead us to base our personal identity on the corporate logos we wear, the branded products we consume, the corporation for which we work, and the Wall Street-funded political party to which we belong. At a deeper level they secure our acquiescence to Wall Street rule with a story that goes something like this:

We humans are by nature aggressively individualistic and competitive and this is all to the good. Competition is a law of nature and the driver of progress and prosperity.

It is the civic duty of the individual to compete to maximize personal financial gain. The invisible hand of the unrestrained free market channels this competitive energy to maximize efficiency, drive innovation, and optimize the allocation of resources to grow the economy and thereby bring prosperity to all.

The public interest is nothing more than the aggregation of individual interests. Those who claim otherwise are socialists who would have government take from the productive to reward the lazy and irresponsible. They would limit our freedom and kill the engine of prosperity by taxing the wealthy and regulating the corporations that bear the risks of investing in the productive, job creating enterprises on which the prosperity of all depends. Since we are each the best judge of our self-interest, government regulation and taxes are an assault on individual freedom and distort society’s priorities.

The market rewards us each in proportion to our productive contribution. Therefore, do not condemn the rich out of envy. Rather honor them for their contribution to creating a strong and prosperous America.

In our great nation, anyone can succeed who applies himself. Failure is a sign of incompetence or a flawed character.

We hear elements of this story so often they run through our heads as a constant refrain telling us that money is wealth, those who make money are creating wealth, and that we can grow the prosperity of all by freeing the wealthy from taxes and Wall Street corporations from regulation.

The financial crash of 2008 has so exposed the underlying fallacies of the fabricated story that millions of people have been shocked out of the trance. It is a moment of opportunity to penetrate the veil of illusion maintained by Wall Street’s propaganda machine and spread public awareness of possibilities for a deep financial and economic restructuring to create the world of our shared human dream.

It’s time to talk honestly about collapse–no matter how others may respond.

David Korten on the foundations of a wholly different economy.

The Story of Stuff will take you on a provocative tour of our
consumer-driven culture.

]]>No publisherAgenda for a New Economy2011/07/05 16:50:00 US/PacificArticleWhen the People Lead, the Leaders Followhttp://www.yesmagazine.org/blogs/david-korten/when-the-people-lead
Deep change is possible, but only when a politically aware citizenry demands it.

Through word and deed, the
early American colonists who refused to accept the authority of a distant British
monarch and his rapacious chartered corporations created a political imperative.
Ultimately the formal political leaders we now call the founding fathers were
forced to issue a Declaration of Independence and raise an army or risk being
swept aside. The people led; the leaders followed.

The idea of ordinary citizens
leading the way to liberate the United States and the world from the grip of
the Wall Street–Washington axis might seem a naïve fantasy. We, however, live
in a unique historical time in which seemingly impossible transformations of
unjust and deeply destructive relationships of power occur on a global scale
with breathtaking speed and inspiring regularity.

An advantage of reaching my
elder years in this historically unique time is that I have been witness,
sometimes at close hand, to events that have fundamentally shifted global
relationships. My lifetime has spanned the liberation of India from rule by the
powerful British Empire, the collapse of the Soviet Union and the dismantling
of the Berlin Wall, the end of apartheid in South Africa, and the People Power
Revolution that brought down the Marcos dictatorship in the Philippines. All
came quickly and were achieved through largely peaceful means.

Attempting
to resist the will of a determined people is futile, no matter how many guns
and how much money the colonizing power has at its disposal.

From my vantage point as an Air
Force officer assigned to the Office of the Secretary of Defense in the
Pentagon as the Vietnam War began to wind down, I witnessed from inside the U.S.
military establishment the beginning of the defeat of the world’s most powerful
military by an ill-equipped but determined ragtag army of Vietnamese peasants. Attempting
to resist the will of a determined people is futile, no matter how many guns
and how much money the colonizing power has at its disposal.

I have also been witness to the
dramatic changes brought by the civil rights, women’s, and environmental
movements in little more than a half century.

On a visit to the South with my parents in my early teens I
rode a bus in Miami in which “colored” people were confined to the last rows. It
was beyond imagination that I would live to witness millions of whites weeping
tears of joy over the landslide election of a black president.

When she went off to
college, Fran, my wife [and publisher of YES! Magazine], was warned by her father that if her grades were too high, no man would marry her. She had a
straight-A average when I met her. I married her anyway—a smart choice, as it
turned out—but assumed without question that she would follow me without
complaint and subordinate her career to mine. Years later, she was the primary
wage earner and I happily and productively followed her path from the U.S. to
Asia and back again, fashioning my career to fit hers.

As a participant in the
citizen portion 1992 UN Earth Summit in Rio, the author of When Corporations Rule the World, and a founding member of the
International Forum on Globalization (IFG), I was on the front lines of the
birthing of global civil society as it developed in tandem with the Internet as
a tool for citizen organizing on a global scale in defense of democracy and
popular sovereignty.

Millions of people of every color and every cultural and religious
identity are sharing ideas and inspiration and growing the political power to
awaken our formal leaders to the imperative to get on board or risk being swept
aside.

The movement began with a
tiny group of "Third World" activists centered in Penang, Malaysia going back to
the 1980s. In 1994, when I was writing When
Corporations Rule the World, there was still virtually no public awareness
that trade agreements were being used to facilitate the global consolidation of
corporate power beyond democratic accountability. That year I was invited to
join a small international group of activists that formed the IFG and launched
a largely below-the-media-radar public education campaign. In 1999, a powerful
and interlinked global civil society announced itself to the world with the historic
Seattle World Trade Organization protest.

Inspired by its success
in Seattle, global civil society subsequently mobilized millions of people in
massive protests wherever corporate elites met with national political leaders
and bureaucrats to negotiate away the people’s rights and interests. The abuse
of multi-lateral trade agreements was thwarted and the WTO never recovered.

In 2001, the movement
energy began to shift from resistance to a proactive effort to build the
institutional foundations of a planetary system of locally self-reliant and
rooted economies that function in balanced relationship to their local
ecosystems.

Now, through word and
deed, global civil society is building the institutional foundations of a New
Economy. Millions of people of every color and every cultural and religious
identity are sharing ideas and inspiration and growing the political power to
awaken our formal leaders to the imperative to get on board or risk being swept
aside.

When ordinary people reject the cultural stories that limit their
possibilities and bind them to servitude, the course of history turns.

As the story fabricated to serve Empire unravels, an authentic story
born of the experience and aspirations of ordinary people is emerging to
displace it.

f we'd stop tearing each other apart, we might see an opportunity to win back our democracy from the rich and powerful.

]]>No publisherAgenda for a New Economy2011/07/01 00:00:00 US/PacificArticleThe Next American Revolution?http://www.yesmagazine.org/blogs/david-korten/the-next-american-revolution
The current grassroots movement against corporate power can draw inspiration and lessons from the time our American forebears liberated themselves from a British king.

The parallels between the independence movement that liberated thirteen colonies on the east coast of what is now the United States and the emerging independence from Wall Street movement are both revealing and instructive.

Taking on the king:

As I wrote in Agenda for a New Economy:

As the economies of Britain’s thirteen colonies on the eastern seaboard of North America began to grow in their production of real wealth, their prosperity attracted the attention of the British Crown, which sought to increase its take through new taxes and the grant of a tea monopoly to the East India Company, in which the king held a financial interest.

Taking on Wall Street:

More than a century and a half later, in the years following World War II, the policies of the Roosevelt New Deal created a prosperous middle class and flourishing Main Street businesses growing the real wealth of their local communities. Main Street’s prosperity attracted the attention of Wall Street, which used its political and economic power to assume the role of colonial overlord and increase its take by charging interest rates and fees; asserting monopoly control of intellectual property rights, markets, and resources; and accelerating its creation of phantom wealth financial assets to expand its claims against the real wealth produced by others.

Taking on the king:

As the threat to their liberty and prosperity became evident, the colonists mobilized in resistance to the British Crown. Some colonists formed local resistance groups, with names such as Sons of Liberty, Regulators, Associators, and Liberty Boys, to engage in acts of non-cooperation such as refusing to purchase and use the tax stamps that the Crown demanded be applied to all colonial commercial and legal papers, newspapers, pamphlets, and almanacs.

The New England merchant class—given to slave trading and piracy—had no reservations about evading import taxes by adding smuggling to their business portfolios. When the Crown decided to assert its authority over the Massachusetts Supreme Court by paying its judges directly from the royal treasury, the people responded by refusing to serve as jurors under the judges.

Other colonists formed Committees of Correspondence, groups of citizens engaged in sharing ideas and information through regularized exchanges of letters carried by ship and horseback. These committees linked elements of diverse citizen movements in common cause across the colonial borders that had long kept them divided.

Taking on Wall Street:

As the Wall Street threat to their liberty and prosperity became clear, the people began mobilizing in resistance. They formed organizations with names like Art and Revolution, Direct Action Network, the Indigenous Environmental Network, the Institute for Local Self-Reliance, the International Forum on Globalization, National Farm Workers Association, Public Citizen, Rainforest Action Network, the Ruckus Society, and United for a Fair Economy. They created Internet forums to share ideas and information and to unite movements in common cause, reached out even across the national borders that had long kept them divided. In alliance with similar groups in other nations, they mobilized millions in global demonstrations that regularly disrupted the international meetings in which the rich and powerful gathered to circumvent democracy, rewrite the rules of commerce to remove restrictions on the consolidation of corporate power, and negotiate their division of the spoils.

Taking on the king:

The colonists also undertook initiatives aimed at getting control of economic life through local production. They boycotted British goods and subjected merchants who failed to honor the boycott to public humiliation. Artisans and laborers refused to participate in building military fortifications for the British. Women played a particularly crucial role by organizing Daughters of Liberty committees to produce substitutes for imported products.

Why We Revolt
When and how do ordinary
people discover their own power?

Taking on Wall Street:

Local Main Street businesses, workers, and consumers undertook initiatives aimed at getting control of economic life through local production and the patronage of local business. They organized farmers’ markets, food co-ops, “local first” campaigns, local investment funds and credit unions, and consumer boycotts of big-box stores and the products of corporations that harm the environment and pay substandard wages. They campaigned for state banks. Local businesses formed national alliances like the American Independent Business Alliance, the Business Alliance for Local Living Economies, and Transition Towns. Local chambers of commerce disaffiliated from the corporate-dominated national Chamber of Commerce and joined these new alliances. New organizations like Americans for Financial Reform, the New Economy Network, the New Economy Working Group, and a New Way Forward formed to mobilize popular support for new rules to break up the big banks and hold financial institutions accountable to the public interest.

Because economic democracy and political democracy necessarily go hand in hand, the New Economy movement is an essential leading edge of this next phase in the larger human struggle to liberate ourselves from cultural and institutional chains of Empire. Wall Street is a formidable foe, but so was Britain. At the time of the rebellion, it was the most powerful empire on Earth. Fortunately, the advantage in any such struggle ultimately lies with a motivated and organized citizenry.

]]>No publisherAgenda for a New Economy2011/06/28 16:25:00 US/PacificArticleHow the Left and Right Can Unitehttp://www.yesmagazine.org/blogs/david-korten/how-the-left-and-right-can-unite
If we'd stop tearing each other apart, we might see an opportunity to win back our democracy from the rich and powerful.

From the beginning of history, Empire’s rulers have maintained their power by sowing fear, mutual suspicion, and division to prevent those who bear the burdens of their rule from uniting against them. Currently, on the political right, anger is directed against government. On the political left, it is directed against Wall Street corporations.

Each blames the other for America’s decline and the economic distress of working families, thus diverting attention from the deeper truth. Corporate money, perks, and the revolving door between Congress and lobbying firms have corrupted the political process. As a consequence, Wall Street and Washington are both running out of control and united in the pursuit of agendas that grow the power and privilege of the few at the expense of the many.

Whether the blame lies more with Wall Street or with Washington is largely beside the point. The bottom line is a Wall Street–Washington axis that has stolen our money and country, denies us our rights, undermines national security, and threatens the future of all our children, irrespective of political orientation.

Wall Street and Washington are both running out of control, united
in the pursuit of agendas that grow the power and privilege of the few
at the expense of the many.

Two events following the 2008 financial meltdown so focused attention on the power and dysfunction of the Wall Street-Washington axis that the establishment propaganda machine that keeps us divided came near losing control. They demonstrate the potential for a broad popular transpartisan political alliance.

One was the government bailout of Wall Street. Virtually no one outside of Wall Street was happy about government taking money from struggling taxpayers in order to give it to Wall Street bankers so they could reward themselves bonuses for crashing the economy.

I come from deeply conservative roots and distrust any concentration of unaccountable power. As the author of When Corporations Rule the World, my view of the unconscionable abuse of corporate power is on public record. I also recognize the profound truth of Paul Hawken’s observation in The Ecology of Commerce that it is big business that creates the need for big government to constrain the excesses and clean up the messes. What we now have, however, is big government aligned with big business to facilitate the excesses and reward those who create the messes. It is a disastrous arrangement against which the vast majority of conservatives and liberals should be united.

Conservatives are correct on a key point liberals tend to overlook: the federal government is too big and intrusive. The Patriot Act, which passed with a large bipartisan majority, is an abomination against democracy and foundational American ideals. We do have a public spending problem. The public debt owed to foreign nations and Wall Street bankers is unsustainable and a threat to national security.

Taxing the poor to pay for subsidies to powerful corporations and squandering our national treasure on unwinnable wars that have no point other than to fuel corporate profits is unconscionable. Health insurance programs designed to benefit insurance and pharmaceutical companies need to be restructured to reduce costs and improve services.

We spend too much on safety net programs that would not be necessary if we rolled back ill-conceived trade agreements that facilitate outsourcing and the global bidding down of wages and benefits and required corporations to pay employees a living wage with basic benefits. It is absurd to tolerate the Federal Reserve giving Wall Street banks virtually free money to loan back to U.S. taxpayers at a market interest rate.

If those on each side of America’s deep political divide could see the
merit in the arguments of those on the other, we might come together as a
powerful citizen alliance.

There is good reason for outrage against both big business and big government. We must respond, however, from a place of love, national unity, and sense of possibility rather than a place of fear, anger, and division. When consumed with anger, our reptilian brain takes control. Our capacity for nuanced critical thought is diminished and we easily succumb to manipulation by propagandists and advertisers. Note the ease with which Wall Street billionaires feed and manipulate the anger of Tea Party members to mobilize them in support of campaigns that support Wall Street interests at the expense of their own.

If those on each side of America’s deep political divide could see the merit in the arguments of those on the other, we might come together as a powerful citizen alliance. We could break up concentrations of corporate power, get money out of politics, end senseless wars, achieve an equitable distribution of wealth, downsize government, and hold politicians accountable to an authentic popular will. That is an agenda that principled conservatives and liberals should all be able to get behind.

]]>No publisherAgenda for a New Economy2011/06/21 17:15:00 US/PacificArticleMapping Uncharted Economic Waters http://www.yesmagazine.org/blogs/david-korten/mapping-uncharted-waters
We're trying to fix a failed economic system with the same thinking that caused the failure. We can make different choices and we must prepare ourselves to do so.

I am among those who hoped that President Obama, based on his campaign promises, would introduce reforms putting the United States on the path to a New Economy.

Unfortunately, for all the powers of the presidency, any new president, no matter what his intention, quickly learns that he is captive to institutional forces that severely limit his ability to set a course for uncharted waters.

For example, once elected, the first task of a new president is to staff the top positions of the world’s most complex and sprawling bureaucracy. He is necessarily limited to selecting appointees from a small pool of people with the experience and credentials to win speedy confirmation and step instantly, with confidence and authority, into impossibly complex jobs.

Under a New Economy regime, government would have restructured Wall Street’s mega-banks to spin off
individual units as independent locally owned community banks.

Those so qualified will almost inevitably be practiced in working within the established institutional and policy frames and disinclined to challenge the foundations of the institutions on which their power and prestige depend.

In the economic policy arena, President Obama faced the additional handicap that his choice of eligible candidates was limited to market fundamentalists, Keynesians, or some hybrid of the two.

Market fundamentalism is more ideology than science. Its practitioners are dedicated to privatizing public assets and services, deregulating markets, lowering taxes on corporations and the rich, and limiting government’s role to enforcing contracts and protecting property rights. This school has prevailed for more than thirty years and pushed through the policies that led to the present unconscionable concentration of wealth and crashed the economy. It remains oblivious to the lessons of its experience.

Keynesians, members of the only contemporary school of economic thought that offers an accepted counter to market fundamentalism, recognize a need for governmental intervention to assure sufficient aggregate demand to keep people employed.

When the financial markets crashed, some market fundamentalists called for subjecting failed banks to market discipline by letting them go bust. Keynesian pragmatists, however, recognized that given the size of the banks in question and the implications of interlinked derivatives contracts, this would instantly collapse the entire economy.

Although they may appear to be poles apart on the role of government, Keynesians and market fundamentalists share a basic Old Economy perspective on many basic issues. Both look to GDP growth as the true and defining measure of economic performance. Both take the existing structure of market institutions as a given. Both ignore the difference between phantom wealth and real wealth.

Without fundamental restructuring another Wall Street crash is assured. Hopefully, next time we will be prepared with at least a rudimentary map to a New Economy.

Neither school has the tools to conceive or implement a New Economy restructuring of the money/banking system. Under a New Economy regime, government would have taken over the failed banks, negotiated financial settlements at steeply discounted prices with creditors, and restructured Wall Street’s mega-banks to spin off individual units as independent locally owned community banks, mostly organized as nonprofits or cooperatives. So-called “shadow banking” institutions devoted solely to playing unproductive financial games would have been shut down.

Instead, captive to Wall Street political interests and limited to an Old Economy frame, the Federal Reserve and the Treasury Department teamed up to shower Wall Street banks and corporations with $13 trillion in virtually free bailout money to fund bonuses, dividends, takeovers, and the purchase of bonds paying a market interest rate issued by the government to fund the bailout.

How different things might now be if Wall Street had been forced to absorb its losses and the government had instead directed just a fraction of this bailout money into the Main Street economy to keep people working and in their homes.

With a New Economy frame, the federal government would have placed the Federal Reserve under government supervision and used its facilities to support a restructuring of the financial system and to provide interest-free financing to rebuild America’s crumbling and outdated infrastructure.

Such a dramatic departure from business as usual would have required a ready team of strong leaders working from a shared framework understood and embraced by a major segment of the public. Tragically, the education and experience of our leaders — including President Obama — and the general public have been limited to economic models that are at best seriously limited and at worst actively destructive.

Recognizing that the needed change will come only as “We the People” demand it, other groups with broad popular outreach capability are currently preparing to launch a national mobilization to support New Economy solutions.

Without fundamental restructuring, another Wall Street crash is assured. Hopefully, next time we will be prepared with at least a rudimentary map to a New Economy.

]]>No publisherAgenda for a New Economy2011/06/14 11:35:00 US/PacificArticleThe Great Stock Scamhttp://www.yesmagazine.org/blogs/david-korten/the-great-stock-scam
Stock sales are supposed to finance new or expanded productive activity. The numbers tell a different story.

We think of stock sales as ways for households to invest and for corporations to raise capital. But if you dig into the numbers, something very different is going on.

In 1999, according to corporate-ethics guru Marjorie Kelly in The Divine Right of Capital, the public sale of newly issued corporate common stock netted $106 billion—in other words, less than 1 percent of the $20.4 trillion in corporate shares traded in that year went to the corporations that issued them.

Even more surprising, Federal Reserve data reveal that from 1981 to 2000, the overall net flow of money to corporations from stock sales was a negative $540 billion, meaning that corporations spent more money from their treasuries to buy back their own shares than they raised by selling new shares.

One might wonder why corporate management would use company money to buy back its own shares, rather than use it either to pay dividends to their shareholders or to invest in new productive capacity.

One effect of such purchases is to inflate the price of the stock, which defenders of the practice argue serves shareholder interests. Another answer is offered by the independent market observer and author Thornton Parker. Using Federal Reserve statistics, Parker found that from 1982 to 2008, the largest net sellers of corporate stocks weren’t corporations, but households—to the tune more than $5 trillion. Corporations during this same period were net buyers by $737 billion.

At first blush, this makes no sense. The presumed function of share markets is to facilitate the purchase of corporate shares by households in order to raise money for productive corporate investments. Corporations should be net sellers and households should be net buyers.

The data thus suggest that since the 1980s, the function of the public share markets has not been to fund productive investment.

Parker provides a telling explanation of why the reality doesn’t match up. When corporate executives sell the shares they receive as part of their compensation packages, the proceeds go to them, not to the corporation, and therefore count as household sales. The data thus suggest that since the 1980s, the function of the public share markets has not been to fund productive investment. Rather it is to build the financial assets of corporate executives who took a major portion of their compensation in newly issued shares.

So much for the claims of politicians and pundits shilling for Wall Street that tax breaks for the wealthy will translate into investments that create good jobs. Most Wall Street players are interested in only one job: their own.

Ownership should be in the hands of people who have a stake in the long-term health of the enterprise and the community and ecosystem in which it is located. Rather than turn our retirement savings over to Wall Street con artists, we will do much better as individuals and as a society to favor direct, long-term investments by individuals in companies of which they have personal knowledge. An owner who needs to cash out his or her shares can sell them to another owner, a new stakeholder, or even the company itself in a private transaction.

Wall Street operates a sophisticated con game that leaves us dependent on a series of scams that it presents to us as financial services essential to our well-being. By pushing down wages relative to the cost of living, Wall Street makes us ever more dependent on consumer credit and borrowing against our home equity. The greater our desperation, the higher it pushes fees and interest rates. It collects our insurance premiums in return for promises of payment in the event of a personal disaster—a promise that it has no intention of keeping if it can wiggle out on a technicality.

It entices us to put our savings in the care of professionally managed phantom-wealth funds with fantasies of a luxurious twenty- to thirty-year work-free vacation at the end of our lives that would place an impossible burden on the working population. It would have us believe that when we buy shares of stock on Wall Street exchanges we are providing investment funds for companies to expand productive output, when in fact we are mostly converting our personal financial assets to the personal financial assets of Wall Street privateers.

Daily expenditures should be covered by living family wages. Insurance is best provided by nonprofit insurance pools managed for the benefit of their participants. Old-age security depends on an intergenerational contract. Savings should flow to real investment in real productive enterprises and infrastructure.

The leadership for change will not come from within the Wall Street-Washington axis. It must come from a powerful citizen movement that reframes the public debate and creates a political force that official office holders cannot ignore.

The first reaction of most people to the call to shut down Wall Street is one of jubilant enthusiasm. The second reaction is, “But what about my 401(k) retirement account?” The same question might be raised about our credit cards, mortgages, and medical, homeowners, and auto insurance.

Money may be nothing but a number, but survival in a modern society is impossible without basic financial services. There are, however, better ways to deal with our very real financial needs than those presently offered by Wall Street. Here are some examples.

Credit Cards.Credit cards have two distinct functions: a convenient means of clearing transactions and an open line of credit. The first is a straightforward and beneficial service if properly regulated and transparent. The second is an enticement to debt slavery and predatory lending.

The solution to wages inadequate to provide for daily needs is not easier, cheaper, or fairer credit; it is to restore living-wage jobs, to tax the rich to provide a floor of essential public services, and to reduce household expenses by restoring the household as a center of production. Financing for large, durable purchases like a home, car, or major appliance can be arranged on a case-by-case basis with a local bank, savings and loan, credit union, or even the local merchant from which the purchase is made.

We best advance the goal of broad participation in responsible
homeownership by measures that increase job security, raise wages,
and maintain stable housing prices.

Home Mortgages. The purpose of a mortgage is to finance homeownership, not to fuel speculation, create a foundation for loan pyramids, inflate a housing bubble, or substitute for a paying job. We best advance the goal of broad participation in responsible homeownership by measures that increase job security, raise wages, maintain stable housing prices, and restore a system of member-owned mutual savings and loan institutions like we once had that extend and hold mortgages for local home buyers under a system of state and federal supervision.

Insurance. Insurance involves a pooling of risk by which a group of individuals guarantee one another against individual ruin from a catastrophic illness, disability, fire, flood, or other random unavoidable event. Private, for-profit insurance companies are an inherently problematic instrument for pooling risk, because they create an inevitable conflict of interest between the insured and those who agree to bear their risk for a profit.

The more appropriate mechanisms are nonprofit, member-owned mutual insurance associations and federal programs like Social Security or Medicare, in which there is a strong commonality of interest. Public programs have the added advantage of assuring universal coverage, spreading the risks over a large number of people, and minimizing the costs of recruitment and administration.

Retirement. The idea that a generation of workers can secure its retirement by storing numbers in an individual retirement account on the computer hard drive of a Wall Street financial institution is a cruel illusion. Retirees cannot eat financial bubbles. Numbers stored on a computer drive will not nourish them even if the institution remains solvent. They need real food, shelter, medical care, clothing, recreation, and other goods and services—all of which must be produced and provided by working people at the time the retirees’ needs are presented. Furthermore, it is impossible to know in advance how long an individual will live or what his or her health needs will be. It is therefore impossible to determine the individual savings required to be secure.

For a society, retirement is inherently an intergenerational contract between retirees and working adults—much like the U.S. Social Security program, in which working people agree to commit a portion of their labor to providing for the elder care needs of those who nurtured them during their childhood. They expect the next generation of youth will likewise care for them in turn.

The threat facing future retirees is not insufficient money—which government can easily create with an accounting entry—it’s demographics. In 1960, there were five working people per retiree. Because of longer life spans and the greater percentage of people reaching retirement age, that ratio was 3.3 to 1 in 2004. Unless the retirement age changes dramatically, it will be down to 2 to 1 by 2040.

Those of working age best secure their elder years by investing in the productivity of those who will follow them—by investing in the education, technology, and infrastructure required for the next generation of workers to provide for their own future nutrition, shelter, health care, and other essentials, while doing the same for those who can no longer provide for themselves.

Wall Street financial scams and phantom wealth financial assets will not feed us or provide us with essential shelter and health care. We had a system of institutions that effectively met our need for the basic financial services required by a real wealth economy—until Wall Street dismantled them. We can rebuild them.